Teachers Pension Help....Please!

DarwinsDrunkMonkey

I am a 42 year old teacher (19 years service). I do a lot of work for educational resource publishers and I work full time so have a taxable income ~£53k.
I want some way of avoiding higher rate tax on the £3k whilst putting it towards another pension. I already have savings and the goal is to retire at 60 or sooner.

If you had ~£3k per year to put in a second pension what would you do/have you done? (Realistically I can increase this to £6k per year if I am happy with the pension).
Any advice is very gratefully received.  

Dazed_and_C0nfused

If you want to retire at 60 then a common tactic would be to open a SIPP or personal pension to build up a fund to bridge the gap between 60 and when you can take your DB and State pension.

You would contribute using the relief at source method so you could pay £2,400 and the pension company adds 25% making a gross contribution of £3,000.

Your taxable income is not reduced by RAS contributions but your basic rate band is increased by £3,000 meaning more tax paid at 20% and less (or none) at 40%.

The gross contribution also reduces your adjusted net income, used to calculate anc High Income Child Benefit Charge.

Another option could be to pay more to the Teachers Pension scheme.  There are a myriad of options, a separate personal pension or SIPP might not be the best option but it does definitely add flexibility.

https://www.teacherspensions.co.uk/members/faqs/working-life/adding-to-your-pension-with-flexibilities.aspx

diddyflanker

Bear in mind that you will be paying somewhere between 7.4% and 10.2% towards your teachers' pension and so it is very likely that you are already under the £50,270 threshold.

I did look at this and decided to put the extra over the threshold into a private pension and then use the new flexibilities to withdraw lump sums between leaving teaching and drawing that pension at 60. Taking a taxable income from the private pension though does dramatically reduce how much you can put into future private pensions though.

tacpot12

diddyflanker said:

Bear in mind that you will be paying somewhere between 7.4% and 10.2% towards your teachers' pension and so it is very likely that you are already under the £50,270 threshold.

I did look at this and decided to put the extra over the threshold into a private pension and then use the new flexibilities to withdraw lump sums between leaving teaching and drawing that pension at 60. Taking a taxable income from the private pension though does dramatically reduce how much you can put into future private pensions though.

Another option would be to pay into an ISA. You don't get the tax releif, but all withdrawals are completely tax free, plus you aren't limited as to when you can withdraw the money, so it you want to retire at 56 you can do this with money in an ISA, but not in a pension.